Navigating the aftermath of a traffic accident can be challenging, particularly when faced with the financial impact of diminished vehicle value. Diminution of value compensation aims to address this by providing financial reimbursement to individuals whose vehicles have lost market value following repairs. At Alfa Law, our team of experienced attorneys specializes in traffic law, offering expert guidance to individuals seeking compensation for the diminished value of their vehicles in Turkey.

The Definition of Diminution of Value Compensation

Even if the vehicles that can be repaired after traffic accidents are repaired, their second-hand market values are adversely affected. Therefore, anyone with less than 100% fault in a traffic accident involving two or more parties is allowed to apply to the relevant parties to claim the difference in the value depreciation of their vehicle.

Objective

The objective of diminution of value compensation is to provide financial reimbursement to individuals who have experienced a loss in the market value of their vehicle as a result of a traffic accident, despite the vehicle being repaired. This compensation aims to mitigate the financial impact of the diminished value of the vehicle due to the accident.

The Legal Bases

In a decision dated 10/04/2002, the 4th Civil Chamber of the Court of Cassation stated; “Even if the car is completely repaired, it should be accepted that it will bear the traces of the damage, so the exchange value of the car after the repair will be lower than the exchange value before the incident. Regardless of how well repaired the car is, the value of the repaired vehicle is lower than that of a vehicle of the same quality that has not been damaged, which results in a loss of its current value.” 

As for determining the amount of diminution of value compensation, the 4th Civil Chamber of the Court of Cassation stated in its decision dated 2021/21252 Base, 2022/5913 Decision Number; “In determining the diminution of value, the difference between the second-hand value of the vehicle before the accident and the second-hand selling value after being repaired is taken into account.” While determining the basis amount for the diminution of value compensation, the principles stated in Annex 1 of the General Conditions of Compulsory Financial Liability Insurances are also taken into consideration. 

As can be seen, the focus of the diminution of value compensation is primarily on addressing the financial loss suffered by vehicle owners after their vehicles are involved in traffic accidents. It aims to ensure that individuals are fairly compensated for the decrease in the market value of their vehicles, even after they have been repaired following the accident. The focus also extends to the legal aspects of claiming compensation, including identifying responsible parties, filing claims, and pursuing legal remedies in case of disputes.

Which parties are responsible for the diminution of value compensation?

  • The faulty vehicle driver
  • The faulty vehicle owner
  • The insurance company of the faulty vehicle’s MTPL Policy is responsible.

In addition, for the insurance company of the faulty vehicle’s comprehensive insurance policy to be held responsible, the clause for Optional Financial Liability Coverage must also be included in the comprehensive insurance policy.

Article 88 of the Highway Traffic Law states: “In an accident in which a motor vehicle is involved if more than one person is liable for compensation for the damage suffered by a third party, they shall be held jointly and severally liable.” Consequently, the individuals and insurance companies from whom diminution of value compensation can be claimed bear joint and several liabilities for the compensation amount.

If you’ve been involved in a traffic accident and are seeking compensation for diminution of value, Alfa Law‘s team of experienced attorneys in Turkey is here to assist you. Our firm, with offices in Istanbul and Antalya, comprises skilled lawyers specializing in traffic law and personal injury cases. Whether you’re in Istanbul, Antalya, or anywhere else in Turkey, our English-speaking lawyers are well-equipped to provide you with comprehensive legal guidance and representation.

In which cases diminution of value compensation cannot be claimed? 

Some of the strict cases the diminution of value compensation cannot be claimed, including; 

  • Diminution of value compensation cannot be claimed in unilateral accidents. There must be a traffic accident involving 2 or more vehicles.
  • The party with 100% fault in the current accident cannot be entitled to the diminution of value compensation.
  • Diminution of value compensation is provided by reducing the proportionate amount of fault of the vehicle drivers involved in the accident.
  • If the vehicle for which diminution of value compensation is claimed has previously suffered damage from the same location and this has caused a loss of value, diminution of value compensation cannot be claimed.
  • There is no diminution of value in vehicles processed with a scrap certificate. (You can review our article to be published for Total Loss Compensation.)
  • Diminution of value cannot be claimed for foreign-plated vehicles involved in accidents in Turkey.

In addition to the situations listed above, payments are made within the policy limits for diminution of value claims made to insurance.

Article A.5 of the MTPL General Conditions states; “Diminution of value, if requested, is determined by an insurance expert appointed by the principles and procedures to be determined by the Institution.” As can be understood from this article, it is mandatory to apply to insurance for the payment of diminution of value compensation. Insurance companies do not make payments ex officio unless an application is made.

As one of the top law firms in Turkey, Alfa Law is committed to ensuring that your rights are protected and that you receive fair compensation for any loss in the market value of your vehicle following a traffic accident. Our team of lawyers, attorneys, and expert litigators will work tirelessly to assess your case, negotiate with insurance companies, and pursue legal remedies on your behalf.

The Necessary Documents to be Submitted in the Application to Insurance

  • Accident Report
  • Statements of Witnesses
  • Sample of vehicle registration certificates
  • Vehicle Photos at the Time of the Accident (if any)
  • Application Petition

An “Expert Report” is not mandatory in applications made to insurance, however. After the application, insurance companies appoint an expert to determine the amount of diminution of value compensation. However, to avoid being subject to underpayment, it would be more beneficial, in our opinion, for citizens to obtain an “Expert Report” from an independent expert before applying for insurance and to substantiate their claims within the framework of this report.

Statute of Limitations

Article 109 of the Law No. 2918 on Highways Traffic states: Claims for compensation for material damages arising from motor vehicle accidents shall be subject to the statute of limitations, starting from the date the injured party learns of the damage and the liable party, for two years, and in any case, within ten years from the date of the accident. Consequently, as understood from this provision, the party suffering damage as a result of an accident has 2 years from the date they learn about the damage and the liable party to claim compensation.

Legal Remedies in Case of Dispute

Within the framework of the issues we have tried to explain above, if the insurance company does not make a payment or makes a partial payment within the legal period following the submission of the documents to the insurance company; an application can be made to the Insurance Arbitration Commission or a lawsuit can be filed in Commercial Courts of First Instance.

In addition, diminution of value compensation can be demanded from the driver of the faulty vehicle and the vehicle owner by Notary Public Notice, and in case the demand remains inconclusive, a lawsuit can be filed.

To summarize, individuals or legal entities who will apply for diminution of value compensation should consult an expert lawyer and, before applying to insurance. Therefore, don’t let the complexities of Turkish law overwhelm you. Contact Alfa Law today to schedule a consultation with one of our experienced lawyers and take the first step towards securing the compensation you’re entitled to. With our expertise, dedication, and commitment to client satisfaction, we’ll ensure that your rights are protected and that you receive the legal support you need during this challenging time.